View From The C-Suite

Execs Weigh In On Consolidation, Technology, Disruptors At Lodging Conference

The overall impact of consolidation, an increased investment in technology and disruptors were among the key issues discussed by industry execs during “A View From The C-Suite” panel at last week’s Lodging Conference in Phoenix.

The panelists expressed a number of different thoughts when it comes to brand consolidation, which has become a significant trend throughout all facets of the industry following Marriott International’s acquisition of Starwood Hotels & Resorts two years ago.

Greg Mount, President & CEO, RLH Corporation, pointed out that the company has opted not to focus on the “big colossal acquisition opportunities,” but rather some deals that may not have been on everyone’s radar.

“We can acquire a brand like Knights Inn and get that somewhere down around a 6 or 7 multiple. When you think about some of the multiples that some of these other transactions have been trading at it’s very accretive for us and very valuable for us,” he said.

Mount added, “We think that there are still a number of those out there. There are a number of regional brands that for an organization like ours that has a really great, strong platform we become a really big aggregator for those owners.”

Meanwhile, Keith A. Cline, President & CEO, CorePoint Lodging Inc., weighed in on the sale of La Quinta to Wyndham Hotel Group earlier this year by acknowledging the challenge for a single brand to achieve economies of scale and distribution.

“The logical next step really for the La Quinta brand was to entrust the brand and management company to someone who had that portfolio effect and had that network effect. That would allow the brand to grow and do what it’s supposed to do,” he stated.

But despite some of the obvious benefits, panelists also addressed some of potential drawbacks of consolidation.

Ken Greene, president, Americas, Radisson Hotel Group, noted. “I’m a believer that scale is good, but too much scale sometimes is not good. If you define a shelf as a segment I believe that having a brand on every shelf of every segment is important. I think having a lot of brands on that same shelf, under the same family of brands, becomes problematic,” he said.

“For the members the main thing is the ROI...When they are acquired and these brands are consolidated make sure that when it’s happening that it’s a seamless process, not where as an owner I’m going to have two different systems or I have a lot of waiting time or down time or guest service issues. From an owner’s standpoint for the brand if they are acquiring they should already have that mindset of what’s going to happen and what’s the next step moving forward,” he said.

Thomas Magnuson, CEO and co-founder, Magnuson Hotels, commented, “the corporate goals of large consolidators are not symbiotic with that of the original owners underneath them.”

Meanwhile, investment into technology is always a critical area for hoteliers.
“We took a stance on this four years ago and really put a flag in the ground and said we are going to be innovative and we’re going to base our organization on technology and we’ve really worked on that. We started with 55 hotels [before the recent acquisitions], we did not have to turn the titanic to implement this technology,” said Mount.

He added, “We have worked very hard to focus on the guest and bring technology forward that helps the guest. We just announced the first hotel that utilizes Apple TV in conjunction with DirecTV; that’s not been done before. We’re always looking at the space and want to continue to be a leader,” he said.

Mount offered some specifics on future technology, “I think you are going to start to see more robotics come in.”

Greene, meanwhile, noted the company recently rolled out a full technology system called Emma at its last conference and detailed some of the primary considerations for introducing new technology.

“From a technology platform perspective you have to make sure you have a scalable system that has a long life that you can build upon and that’s flexible. Just like any brand standard, there should be a return on investment for an owner. If it doesn’t make more revenue or decrease expenses we have no business doing it as a brand,” he said.

Magnuson took that a step further and touted the company’s new system. “We will never impost costs on our franchisees from a technology perspective. We have spent all of this year putting in a single technology platform underneath all of our hotels,” he commented.